What would a vote to remain in the EU do for UK house prices?

Most speculation on the outcomes of June’s referendum for the property market focus on what might happen to house prices if the UK votes to leave the EU. This result seems, and reasonably so, like the greater unknown. But what happens if the UK votes to stay? Well, it’s difficult to say. What we can tell you for certain is that we won’t see a non-event.

Britain’s property market has been acting strangely in the last two months as people either bet their portfolios one way or the other, or hold off on making any deals until an outcome is known. Because of this, even a vote to ‘keep things the way they are’ is going to trigger some interesting financial and market fluctuations as the world readjusts. Let’s look at this in a bit more detail:

In the event of a Brexit, the UK property market will surge on many fronts: the pound sterling has already fallen significantly, which will have repercussions in the housing market. Housing prices are expected to fall while mortgages are expected to go up, Chancellor George Osborne said in a recent interview. But some economists hold opposing views: depending on the new border trading laws established if the UK exits, a lower pound value could encourage foreign property purchases (and commercial leasing) and float property prices back up.

The first quarter of this year saw a record average house price in the UK. This was a general trend but certainly peaked in March as investment buyers sought to buy properties ahead of a new stamp due tax effective as of April 1. If you’re planning on buying a second home and think you may have to pay the extra stamp duty, use a mortgage calculator to check how that 3% surcharge will add up over the course of your repayments. The current figures on pricing and sale volumes suggest that property in the UK is valued as highly as ever – both in the residential and commercial sectors. An acute shortage of homes compared to current buyers has ensured that despite fears related to the referendum, residential property prices have not actually dropped since growing by record amounts early in 2016. However, prospective buyers and sellers of office space seem to be holding their breath (and their portfolios) while they wait for a referendum result.

What we can expect, should the UK vote to remain, is that all the caution in the market will turn into renewed confidence. We may see record levels of deals done in the commercial sector this summer. Renewables infrastructure is also likely to bounce back to the highs we’ve seen in the last few years (but notably not in 2016).